Friday, April 24, 2009

Low Wages, High Student Loan Debt Drives Iowa's Brain Drain

There was a great article in the Boone News Republican last month about a talk Christian Fong, Vice-Chair of the Generation Iowa Commission, gave to the Boone Young Professional group.

The article is full of statistics that highlight that low wages and high student loan debt is what is driving Iowa's brain drain.

Between 1995 and 2000, Iowa saw a migration of 7,302 individuals with less than a high school education come into the state, enticed by wages that are $3,262 higher than the country average. For those with a high school education, the state saw a 2,534 person jump in that five-year time frame, enticed by a wage premium of $611. For individuals with an associates degree, however, the state saw a drop of 28 individuals with wages $4,077 below the country's average. For individuals with a four-year degree, Iowa had 18,362 leave the state, as a result of a $9,302 wage gap.

While some may argue that cost-of-living makes up for the wage gap, statistics in the Generation Iowa Commission's status report say otherwise. The report notes that after adjusting for cost-of-living, Iowa pay still ranks second to last in the Midwest, followed only by South Dakota. Additionally, education costs are not included in cost-of-living, which adds to the debt. Iowa graduates carry the sixth-highest student loan rate in the country, with an average of $24,990 at graduation. The repayment of large student loans creates a long-term burden that nearly offsets all other cost-of-living advantages.

Currently, Iowa's workforce is peaking in size. In 10 years, however, Iowa's workforce will lose, on average, about 60,000 people every five years as older Iowans retire. This is equivalent to losing a large company like Principal Financial every year, Fong said.

With a four percent net loss of next generation Iowans each year from 2000-2007, Iowa is cost 10 percent of its economy.

"Brain drain can cripple a town's ability to see past what's always been," Fong said. "It takes young people to not realize that something wasn't impossible before."

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